RBI said on Monday it is in talks with the government to reset foreign institutional investment limit in government bonds in rupee terms.
"It is a continuous process between the government and RBI," Reserve Bank Deputy Governor H R Khan said when asked if the central bank is considering setting investment limit in gilts in rupee terms.
The current investment limit for FIIs in G-secs is $30 billion annually. Of the $30 billion, FIIs are allowed to invest $25 billion, whereas $5 billion is for long-term investors.
Finance Secretary Rajiv Mehrishi also said that calculating the investment limits of FII should ideally be done in rupees.
"A final decision will be taken by RBI," Mehrishi said.
The calculation in rupee term would provide higher headroom for investment and result in greater inflow of foreign currency.
RBI and government have been trying to attract foreign investment. This is also necessary to keep the rupee stable against dollar.
Rupee has been depreciating against dollar for past few weeks. Today it ended higher by 4 paise to 63.40 against the US currency.